The Official Fuel Prices Thread

This is a discussion on The Official Fuel Prices Thread within The Indian Car Scene, part of the BHP India category; Well, how long will the govt keep increasing fuel prices ? We have a hawk-eyed RBI governor , who's going ...

Well, how long will the govt keep increasing fuel prices ? We have a hawk-eyed RBI governor , who's going to hike interest rates with inflation in sight. Inflation figures came in high in April , and with this hike is bound to stay high. When diesel goes up everything from food to the school bus fare shoot up.

The govt can have either economic growth, or reduced fiscal deficit by taxing fuel - but not both. Catch 22 situation.

and also for leaving a massive deficit and inflation. Inflation is the termite which eats into our savings, esp of retired folk like yours truly. ₹2 per litre adds may be 0.1% to our bills, 5% inflation eats up 5% of out savings. Keynesian's like Pranab, Amartya Sen, SoniasNAC, or the new avatar Swamy all subscribe to this view. MMS brought in Rajan I think to curb this. I remember every budget as a kid, taxes will go up (Income Tax hit 93 or was it 97% in Indira days). at Budget time the markets will just go dry!

and also for leaving a massive deficit and inflation. Inflation is the termite which eats into our savings, esp of retired folk like yours truly. ₹2 per litre adds may be 0.1% to our bills, 5% inflation eats up 5% of out savings. Keynesian's like Pranab, Amartya Sen, SoniasNAC, or the new avatar Swamy all subscribe to this view. MMS brought in Rajan I think to curb this. I remember every budget as a kid, taxes will go up (Income Tax hit 93 or was it 97% in Indira days). at Budget time the markets will just go dry!

So what's the solution. We are being screwed both ways. One team keeps fuel prices at ~Rs.65-68(petrol) when crude price is $110. The other team comes around and holds the price at the same level when the crude price is at $40. Add to that the inflation of food items is at record highs. So where do we save anything?
The whole thing is a scam.
Income tax, why not abolish it as only 3% of the population are punished with it. 30% earnings are gone straight away and above that we have to pay taxes on everything else.

Majority of the time, he ruled when the global financial and Petroleum price conditions were very bad. The ones ruling now has things which are a lot more easier. Still they are squeezing us in fuel prices on every possible front.

What is with the diesel price hike? It is almost at par with the petrol hike. Historically (and I am talking after decontrolling the diesel), petrol hike used to be marginally higher. Are they really following the market based pricing for diesel. It seems they are not and want to intentionally bring diesel price as close to petrol as possible. Diesel is suddenly the step child after the environmental impact brouhaha.

So what's the solution. We are being screwed both ways. 1. One team keeps fuel prices at ~Rs.65-68(petrol) when crude price is $110. The other team comes around and holds the price at the same level when the crude price is at $40. Add to that the inflation of food items is at record highs. So where do we save anything?
The whole thing is a scam.
I2. ncome tax, why not abolish it as only 3% of the population are punished with it. 30% earnings are gone straight away and above that we have to pay taxes on everything else.

1. By putting in a massive subsidy esp on Diesel. Also, on Gasoline, and LPG. Fueling inflation to 10%. Also, drove all private players off the market (the main aim of the socialists - total state control).

2. Remember Income Tax is

i. the most efficient to collect. Expand the base by taxing agricultural income for starters.

ii. It is progressive - you pay more (tax rate) as you earn more. On the other hand other taxes are indiscriminate and hence regressive. What I will like to see in the introduction of Agricultural Income Tax.

At one time by hiking Income Tax to 90% plus we made tax evasion a sport. I have no issues with Tax Avoidance, which is legitimate. Every time tax rates were reduced tax receipts went up.

What is with the diesel price hike? It is almost at par with the petrol hike. Historically (and I am talking after decontrolling the diesel), petrol hike used to be marginally higher. Are they really following the market based pricing for diesel. It seems they are not and want to intentionally bring diesel price as close to petrol as possible. Diesel is suddenly the step child after the environmental impact brouhaha.

In the west Diesel is costlier than Petrol. Take GB, US, D, CH etc. With us Diesel is taxed much less than Petrol. Equalize all taxes and levies, then reality will be out.

1. By putting in a massive subsidy esp on Diesel. Also, on Gasoline, and LPG. Fueling inflation to 10%. Also, drove all private players off the market (the main aim of the socialists - total state control).

2. Remember Income Tax is

i. the most efficient to collect. Expand the base by taxing agricultural income for starters.

ii. It is progressive - you pay more (tax rate) as you earn more. On the other hand other taxes are indiscriminate and hence regressive. What I will like to see in the introduction of Agricultural Income Tax.

At one time by hiking Income Tax to 90% plus we made tax evasion a sport. I have no issues with Tax Avoidance, which is legitimate. Every time tax rates were reduced tax receipts went up.

Subsidies are long gone on fuel at least. Now its the excise duties which where jacked up to keep the fuel prices higher on a lame excuse and now fuel prices are being raised based on the international sneeze. Which again is not per the actual trend.
Even after 70 years of self rule only 3% are income tax payers, I feel like a class less citizen. But who cares as long as they are getting my 30% free money.
Tax on agriculture income is a non starter in India.

@AJITHAA; I tend to agree up front, but what really triggered Excise Increases was the states defining a new 'animal' Floor VAT. It started with UP and Delhi. They had gone fat on the VAT they were collecting. So they would have kept hiking VAT and not let us have fuel any cheaper.

Also, remember the difference between tax and cess/levy. A percentage of the Tax (I think now 42%) goes to the states, while the cess/levy stays with the centre.

China has a clear policy - below $40/barrel retail fuel prices don't change. That is the floor - ostensibly to discourage consumption and curb pollution. The same seems to be the case in India but no one says it explicitly.

The government hints that excise duty may be reduced if crude averages above 50 dollars a barrel.

Quote:

The Central government is set to cut excise duty on petroleum products if global crude prices stay over $50 per barrel for a sustained period. "We will consider reducing the excise duty on petroleum if crude stays beyond $50 for a certain period," a senior government official said on condition of anonymity.

@AJITHAA; I tend to agree up front, but what really triggered Excise Increases was the states defining a new 'animal' Floor VAT. It started with UP and Delhi. They had gone fat on the VAT they were collecting. So they would have kept hiking VAT and not let us have fuel any cheaper.

Also, remember the difference between tax and cess/levy. A percentage of the Tax (I think now 42%) goes to the states, while the cess/levy stays with the centre.

That should not be the excuse for increasing excise duty. It is simply the greed on part of Finance ministry. They will never tax the vote bank but keep milking the minorities (read Income Tax payers and middle class) as that will help filling up the coffers without any impact on the vote bank. It is very clever strategy IMO. We say 42% goes to states but at the same time 68% goes into Centre's pocket. I am afraid that soon they will add 15% of Service tax on fuel as the petrol pump attendant gives us a service by filling our tank!

@sourabhzen; 42%+68% is 110% imho. Maybe my maths is getting dated, or I see a bit of skewed arithmetic. As per the PM the states get about 65% of the resources overall at their discretion. I see no reason not to tax the agricultural income at least of the richer farmers.

If I remember right the business of raising Excise started only after states started jacking up VAT. I guess you hold the FM responsible for the abomination called floor VAT. Started with UP and Delhi.

In any case at least Gadkari is building roads, while Delhi is busy advertising its so called achievements, and UP sending another tiger to die in the safari park (the latest has also fallen sick), or giving 45 lacs to Akhlaq's family.

If the centre will start cutting Excise once crude crosses $50 then it is fine. Remember you cannot print money as Indira used to do, but have to balance the books.